This week marks the celebration of World Intellectual Property Day – an opportunity to reflect on and highlight the many ways that patents and trademarks serve as the very foundation of modern life in America as we know it. Our country was born from and has an astounding legacy of innovation. American ingenuity is responsible for the automobile, electric light bulb, telephone and so many other things that we now take for granted. So, why in America instead of someplace else? Because those who dared to innovate knew their ideas would be protected by a strong patent system that incents and rewards invention.
For biopharmaceutical companies, not only are patents the lifeblood of the industry, the patent system forms a critical legal shield protecting innovations as they make their way from labs to patients. Those who willingly violate patents – “patent trolls” – are not just criminal; they threaten the very foundation of the biopharmaceutical pipeline, potentially disrupting new medicines that could help Americans live longer, healthier lives.
In Washington right now, Congress is debating the “Innovation Act,” legislation intended to address these abusive practices. It follows on and would update the America Invents Act (AIA), signed into law by President Obama in 2011.
While the legislation is well-intentioned, certain provisions in the new bill could have broad, unintended consequences that hurt legitimate patent holders. PhRMA has three specific concerns with the Innovation Act as currently written:
First: Enhanced Pleadings. The Innovation Act proposes addressing patent litigation abuses by increasing requirements for the initial filing to begin a patent infringement lawsuit. This change would increase the cost, time and effort required to begin a legitimate patent enforcement action. And it would hamper the ability of legitimate patent owners to stop infringement of their patents and it could undermine the value of patents and the incentives for innovation.
Second: Discovery Stay. The Innovation Act requires a court to severely limit discovery in patent cases until after the court issues a claim construction, which is a ruling by which the court determines the meaning and the scope of the patent. Requiring such action could increase the cost and delay the progress and ultimate resolution of cases.
Third: Inter Partes Review, or IPR. The provision in the America Invents Act (AIA) has led several predatory hedge funds to short stock of companies holding legal patents. These funds then file petitions with the goal of fattening pockets while damaging innovators holding legal patents, seemingly an unintended – but glaring – consequence of the AIA.
PhRMA is not alone in its concerns. As of today, 144 American universities, hundreds of businesses and independent investors in innovation have joined in registering their apprehensions about the bill.
On World IP Day, Congress should listen to the growing chorus of American innovators and revise the Innovation Act. The stakes of neglecting to do so are just too high.